Thursday 30 July 2009 18.17 EDT
First published on Thursday 30 July 2009 18.17 EDT

It was about midday on 29 May 2007 when between 80 and 100 men dressed in the uniform of the special commandos at the Iraqi ministry of the interior calmly blocked off all the major roads leading to the ministry of finance's technology centre in Baghdad.

An estimated 19 Toyota Land Cruisers, known to be used only by the ministry of the interior, drove through armed roadblocks and came to a standstill in front of the building where Peter Moore, a British computer specialist, another analyst and four security guards were working.

Moore, who had recently arrived in the country from voluntary work in Guyana, was in the process of installing sophisticated software for the US state department that would have tracked millions of pounds of international aid money, and the estimated $50bn Iraqi annual oil revenue, as it was disbursed through the ministry of finance.

Unknown to the kidnappers, two intelligence officers were parked opposite the centre, outside an outpatients' clinic. Through an intermediary – a former high-level intelligence source – one of the officers described the operation to the Guardian:

"The cars started coming down the street and surrounding the ministry. The cars were marked 'ministry of the interior' – they are Toyota Land Cruisers, they belong to the ministry of the interior ... The operation was well planned and they were carrying Kalashnikovs. One group came out with two of the hostages. They put them in the first car. They weren't hooded or handcuffed. Then they brought the other three men out. Then they brought out the men's belongings, their briefcases and rucksacks. They put those things in a separate car.

"People started gathering around. It was near the al-Rafidain Bank on Palestine Street. The people were gathering around and the kidnappers were shouting: 'Go home now, this is nothing do with anyone. Do not look, this has nothing to do with you.'"

The kidnappers had passed through the armed checkpoint at the centre's gate without a shot being fired and conducted the entire kidnap operation in under 15 minutes. Witnesses at the scene, who have never been interviewed before, confirm that it was a huge, highly militarised operation.

Whahib Allawi said: "I was at the reception desk when the kidnappers entered the building. There were so many of them, all heavily armed. They all went upstairs and the employees began to run out of the building. They kept shouting 'Sit down! Sit down!' to everyone they saw. They kicked anyone who was in their way." Haider Sa'adoon, a technician also working at the centre, said: "One of the kidnappers burst into my office and said: 'Stay where you are and don't move!' It was terrifying … You could tell there were many of them, because of the sound of the running footsteps … It made so much noise."

After the hostages were taken, the two intelligence men, who were working for the Iraqi ministry of defence, followed the convoy as it took off at high speed through the city, cutting through Palestine Street and Beirut Square towards al-Sha'ab stadium.

"We thought the cars might be heading to the ministry of the interior, which is very near, but they didn't – they passed the al-Sha'ab stadium and were heading towards Luna Park. No one was stopping them at the checkpoints, they were all in ministry of the interior cars, who would dare to stop them? We couldn't keep up."

According to the same high-level intelligence source, a kidnap operation of this kind would have been impossible without government assistance.

"This operation is one only a government can do. Not al-Qaida. Al-Qaida might be able to get hold of three or four cars, but they can't bring more than 20 commando cars and all those uniforms. Only the state has the capability to carry this out."

The two intelligence operatives were subsequently told bythe Iraqi defence ministry to keep quiet about what they had seen. The Guardian'sintelligence source said they were ordered not to proceed with the surveillance. "The ministry of defencecalled us and told us: 'You must forget all about this subject – completely forget it. Act as if you know nothing and tell your colleagues not to say a word.'"

After the kidnappings GardaWorld, which employed the four security men – Alan McMenemy, Alec MacLachlan, Jason Cresswell and Jason Swindlehurst – conducted its own investigation into the abductions.

Paul Wood, a former British army officer, spent 10 months compiling a report and believes that there was some level of collusion, that the kidnapping was unprecedented and "too perfect".

He said: "This kidnapping took place on government property, in the ministry of finance building where there was security in place. It would make sense to think that there was someone on the inside telling the kidnappers when to come, what to expect and how to deal with any security issues they were going to face.

"It strikes me as unlikely that there couldn't have been some kind of collaboration for the convoy of that size: 19 vehicles with 50 people in police uniforms driving in through the gates."

Wood, who has now left Baghdad and is currently working in Afghanistan, said: "None of us had seen anything like it before. We always operated on the basis that our people were safe once they got inside a government ministry. This kidnapping was the first of its kind and after that we changed the way we worked, how our security detail worked completely."

The suggestion that officials in three government ministries may have been involved and helped the kidnappers has been strongly denied by the Iraqi government and the country's national security adviser, Dr Mowaffak al Rubaie. But he told the Guardian government ministries were "not infallible" and that the ministries had been infiltrated by extremists.

It is the alleged corruption in Iraq and its ministries at the time of the abductions that have now come into focus. Judge Radhi Hamza al-Radhi, former commissioner of the Commission of Public Integrity in Iraq, testified to the US Congress on 4 October 2007: "The cost of corruption that my commission has uncovered so far across all ministries in Iraq has been estimated to be as high as $18bn." He had fled to the US in August 2007 after his family's home was targeted in a rocket attack.

The computer system Peter Moore was in the process of implementing, known as the Iraq financial management information system, was nearly complete and about to go online.

Vance Jochim, who was the chief auditor and a US adviser for the Commission of Public Integrity based at the US embassy in Baghdad, said: "The new system would provide more transparency and accountability over the oil and other revenue handled by the finance ministry" – which he said had been resisting its implementation for nearly two years.

Judge al-Rahdi said: "The ministry of finance was the centre for the tracking system. It was linked to 11 other ministries. They started using the program for a few months, but after the kidnapping of Peter Moore the ministry of finance immediately stopped the system. As a result all the other Iraqi ministries were not able to keep the program going."

Eight months after the kidnappings, the only other location with a full record of the Iraqi government's financial transactions and records of possible financial misconduct – Iraq's Central Bank – was destroyed in a fire. The subsequent investigation found that it was arson.

The intelligence source said: "Many people don't want a high level of corruption to be revealed. Remember this is the information technology centre, this is the place where all the money to do with Iraq and all Iraq's financial matters are housed. The centre is linked to the Americans and all the money transfers. Everything, right down to the last penny, is in that centre."

Vance says the track record of those involved in helping to find Iraq's missing millions is not a good one. The woman who invented the automated computer tracking system that Moore and the others were sent to install and teach left the country without notice, because people had begun asking about her at the ministry of finance and her security firm, Kroll, believed she was on the list for attack.

Since the kidnappings, four hostage videos have been released by the kidnappers calling for a response to their request to have a number of prominent members of a radical Shia group, the Righteous League, released.

In the first video, on 4 December 2007, they also made reference to a financial motive: "They [the hostages] have confessed and given details of plans in which they came to loot our wealth under the fake cover of being consultants at the finance ministry. We will show details of their confessions later."

According to people at the ministry there was no need for confessions. Everyone down to the receptionist knew the work that Moore and his bodyguards were there to do. The 12 female students he was teaching knew he was there to install the management information system.

A subsequent video shows the hostages looking increasingly desperate and calling for their release. However, the last two have only featured Moore. He is believed to still be alive and there are some in the Iraqi government, including the national security adviser, who have worked hard to try to bring the hostages back safely.

"They came to help build Iraq. The men who were kidnapped, they were helping and building and setting up institutions for us. And they were taken away. We feel very bad about that."

Sixth man escaped

It had always been thought there were five westerners at the ministry of finance in Baghdad on the day of the kidnap in May 2007. But the Guardian can confirm that a sixth man – a US IT consultant – working for BearingPoint was also with the five Britons when the hostage takers struck.

According to a former senior intelligence official the sixth man, whose name is known to the Guardian, was in the toilet at the time and was narrowly missed by the kidnappers.

"The police were there and the guards were there, they said there was another man, they did not take him, he was at the bathroom," the intelligence source said. "I was told by the guard one foreigner stayed, they had contacted his employers. They came to take him away accompanied by security."